London-based oilfield contractor Acergy S.A. (ACGY) re-affirmed its 2009 financial guidance, while expecting flat sales and lower margins next year.
 
The company cautioned that tougher competition for new tenders and continued irregular timing of projects will lead to lower adjusted EBITDA margin in 2010, compared with the current year results. Management indicated that the business environment still remains challenging and the offshore oil services provider is bracing up for intense competition and price pressure next year.
 
In recent times, commodity prices have been way below year-earlier highs, driving down exploration and production activity among oil companies. This translates into less work for service companies like Acergy, chipping away at its revenues and earnings.
 
However, according to the Oslo-listed firm, irrespective of the grim short-term outlook, the medium-term market fundamentals remain strong, primarily due to rising field depletion and the necessity to access new reserves. Additionally, Acergy is strongly positioned, both financially and operationally, to benefit from asset opportunities (should they emerge), and to take advantage of new growth areas when markets rebound.
 
The company confirmed its 2009 guidance for revenue and margins, while the effective rate of tax is expected to be less than 35%. Acergy anticipates cash balances at the end of the fiscal year to be approximately $900 million, after accounting for capital spending of $180 million and shareholder dividends of $40 million. The company expects to end the year with a backlog of approximately $2.9 billion (including roughly $1.6 billion for execution in 2010). Acergy is set to incur $130 million on depreciation and amortization costs.
 
Looking forward to fiscal 2010, as already discussed, revenues are expected to be steady year over year, while profitability is likely to fall. Tax rate for the next fiscal is anticipated to be higher than that of 2009, mainly due to the expected geographical mix of profits. Finally, Acergy’s maintenance capital expenditure commitments are expected to be roughly $90 million. Cash expenditures and depreciation and amortization costs for 2010 are anticipated at $140 million each.
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